One of my biggest tips would be to find a mortgage broker with plenty of experience with first home buyers.
Buying your first home can be both an exciting and daunting experience for young investors.
The first step you can take before your saving efforts begin is becoming informed on the buying process as early as possible. Having realistic expectations and revealing those unexpected costs early will set you on the right track to owning your first home, sooner.
Get your finances in order. There’s no shortcut around this one, generate an estimate of what you’ll need for your deposit…and then add 10%. Generally speaking, the bigger deposit you’re able to save before buying, the better. It is possible to purchase a house with a 5% deposit however you leave yourself a greater chance of defaulting on your loan and banks will have less grounds to be flexible with your borrowing arrangements. It all depends on your capacity to save however as a rule of thumb I look to save at least a 20% deposit.
One of my biggest tips would be to find a mortgage broker with plenty of experience with first home buyers. They’ll help guide you through the many decisions needed to be made potentially saving you time, money and a whole lot of stress. Saving 20% or more for your initial deposit also means you’ll avoid paying lender mortgage insurance which is a one off payment protecting your mortgage lender against your loan and can be up to $1000.
The real cost of buying a home is far greater than the listed sale price. Including lenders mortgage insurance, there are home loan application fees, stamp duty, legal fees, insurance payments, mortgage registration fees and building inspection fees which all add up. Also as a side note to your finances, be sure to assess all items and existing loans you have as these will impact your borrowing and credit worthiness.
Next answer the question, are you buying as an owner-occupier or a pure investor? It is important to have your end goal in mind as early as possible as there is little room for emotion in the buyer decision making process.
However in saying this, if you’re planning on living in a property your heart is allow a whisper as your current and future lifestyle arrangement should influence your end decision. Take an open mind to inspections and think long term. Be prepared to compromise as there is no such thing as the perfect property. Everyone has their ‘deal breakers’ however keep these clear and be as realistic as possible with them, write them down if it helps.
Finally, if you’re not one for commitment reconsider buying your first home until you’re more comfortable. Hesitation will almost certainly hold you back, the search to finding the right home requires an ongoing commitment and the purchase process being a complete financial commitment.
At the end of the day all the stress and uncertainty is worth it. Owning your first home as early as possible in life is one of the best decisions you can make to ensure financial freedom and stability.